Over 60 GW of Green Hydrogen Projects in the Pipeline Globally, Says Report
Less than half of these projects are likely to be operational by 2035 due to higher costs
Fuelled by post-pandemic green stimulus packages, newly proposed green hydrogen projects are on the rise across the world. According to Rystad Energy research, the global pipeline of utility-scale green hydrogen developments- projects with capacities greater than 1 MW- now exceeds 60 GW, with 87% of this capacity coming from gigawatt-scale projects.
Green hydrogen projects are hydrogen electrolyzer projects powered by renewable sources. These projects are currently in the planning stage across continents. However, Europe and Australia dominate the global pipeline with 11 proposed electrolyzer projects of 1 GW or more.
Four of these projects will come from Australia: the Asian Renewable Energy Hub, Murchinson Renewable Hydrogen Project, Gladstone Hub, and the Pacific Solar Hydrogen.
“Despite the growing pipeline, we forecast that less than half of this capacity (30 GW) will be operational by 2035, as developers will need to lower production costs. Government support will be required to advance projects more quickly, particularly for those developments that will be powered by costlier offshore wind,” says Rystad Energy’s Head of Renewables, Gero Farruggio.
The solar and onshore wind would power the majority of global hydrogen electrolyzer projects. Only five offshore wind farms would power large-scale projects, the study said.
“Not to forget, the capital expenditure (CAPEX) required for onshore wind and photovoltaic (PV) has dropped significantly in recent years- a price factor critical to reducing the levelized cost of hydrogen. Notably, the CAPEX of utility PV has fallen from over $4/W in 2011 to $0.75/W in 2020. Thus, it’s no surprise that solar PV powers several pioneering hydrogen projects. Conversely, offshore wind offers a much higher capacity factor but at a higher price tag,” according to the study.
Hydrogen produced from solar-powered equipment could be cheaper than fossil fuel-based production methods in a decade, indicated another recent study.
Green hydrogen is considered a key driver, especially in Europe, as governments establish COVID-19 recovery strategies. The European Union (EU), in its recent hydrogen strategy, called for 40 GW of hydrogen electrolyzer capacity by 2030. It also includes constructing an import supply chain with an additional 40 GW of electrolyzer capacity outside Europe, including Ukraine and North Africa.
Spain, Germany, and France are committing 4, 5, and 6.5 GW of green hydrogen by 2030.
Europe is already in the lead in operational, utility-scale projects above 1 MW, with most of the operating projects located in Germany. Germany is also collaborating with Morocco to support green hydrogen production and develop the first 100 MW hydrogen electrolyzer project powered by solar in North Africa.
The EU’s current pipeline of proposed electrolyzer projects is 27 GW. However, most electrolyzer installations currently operating are in pilot or research and development phases with low capacities.
The 10 GW NortH2 project, proposed by a Shell-led conglomerate in the Netherlands, is one of the largest hydrogen electrolyzer projects powered by offshore wind, apart from the 600 MW Westküste 100 project in Germany, which is being developed by Ørsted and EDF.
Ørsted has another GW-size project planned in Denmark, should it win the bid to develop an offshore wind farm in Bornholm.
According to Rystad, Europe has little choice but to explore offshore wind to power large scale hydrogen developments. Hydrogen electrolyzer projects will likely remain reliant on government support for the remainder of the decade to be economically viable, like the broader offshore wind sector.
Japan and Korea are mulling on importing hydrogen and developing international supply chains, especially in transportation. Meanwhile, in China, hydrogen is expected to feature in the forthcoming five-year energy plan, as well as from provincial authorities.
China is currently producing hydrogen from fossil fuels. State-owned and state-backed corporations such as SPIC, Beijing Jingneng, and CNOOC are working on green hydrogen production.
The 5 GW Beijing Jingneng facility in Inner Mongolia would be the first gigawatt-scale electrolyzer to become fully operational. The facility will include a solar farm and an onshore wind farm. The energy drawn from these renewable sources would feed 400,000 to 500,000 tons of hydrogen per year.
The Australian government has big plans for hydrogen exports, and grants are available at both the state and federal level. The government-funded Clean Energy Finance Corporation (CEFC) has committed $210 million in debt or equity financing; another $50 million funding from the Australian Renewable Energy Agency (ARENA) will be awarded in 2021 for over 10 MW hydrogen electrolyzer projects MW.
ARENA has already shortlisted seven applications, with construction expected to start in the next 12 months. Australia has also signed an agreement with South Korea and Japan to establish an international hydrogen supply chain.
The United States
Although the U.S. does not yet have a clear national hydrogen strategy, it has committed $64 million towards developing hydrogen technologies in 2020. The Biden campaign has made clean energy central to its campaign, with references pointing towards building up the country’s renewable export potential.
Lastly, the OPEC giant Saudi Arabia has set up a gigawatt scale green hydrogen project in Neom – the green economic zone – valued at $5 billion. The project is a joint venture between Air Products and ACWA Power.
Rystad Energy estimates the CAPEX required of offshore wind is twice its onshore counterpart and four times that of onshore solar PV, making it less attractive for locations that have good onshore resources.
Pure renewable energy developers dominate the global green hydrogen pipeline. BP, Shell, Repsol, and GALP have all announced green hydrogen concepts this year.
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.